UNITED STATES of America, Appellant v. William TOMKO.
No. 05-4997.
United States Court of Appeals, Third Circuit.
April 17, 2009.
Opinion Vacated and Petition for Panel Rehearing Granted on Jan. 17, 2008.
562 F.3d 558
Argued on Oct. 24, 2006. Opinion Issued on Aug. 20, 2007. Opinion Amended on Aug. 21, 2007. Rehearing En Banc Ordered on Aug. 19, 2008. Argued En Banc on Nov. 19, 2008.
III.
For the reasons set forth above, we will reverse the Order of the District Court granting a preliminary injunction in favor of the franchisees and remand the cause to the District Court.
Nathan J. Hochman (Argued), Alan Hechtkopf, S. Robert Lyons, United States Department of Justice, Tax Division, Washington, DC, Attorneys for Appellant.
J. Alan Johnson, (Argued), Cynthia R. Eddy, Johnson & Eddy, Pittsburgh, PA, Attorneys for Appellee.
Ellen C. Brotman, Philadelphia, PA, Peter Goldberger, Ardmore, PA, Attorneys for Amicus, National Association of Criminal Defense Lawyers.
Lisa B. Freeland, Pittsburgh, PA, Attorney for Amicus, Federal Public and Community Defenders of the Third Circuit.
Before: SCIRICA, Chief Judge, SLOVITER, McKEE, RENDELL, BARRY, AMBRO, FUENTES, SMITH, FISHER, CHAGARES, JORDAN, HARDIMAN and COWEN, Circuit Judges.
SMITH, Circuit Judge, with whom McKEE, BARRY, AMBRO, FUENTES, CHAGARES, JORDAN, and HARDIMAN, Circuit Judges, join.
The Government appeals the reasonableness of William Tomko‘s below-Guidelines sentence of probation, community service, restitution, and fine for his tax evasion conviction. If any one of a significant number of the members of this Court—including some in today‘s majority—had been sitting as the District Judge, Tomko would have been sentenced to some time in prison. But “[t]he fact that the appellate court might reasonably have concluded that a different sentence was appropriate is insufficient to justify reversal of the district court.” Gall v. United States, 552 U.S. 38, 128 S.Ct. 586, 597, 169 L.Ed.2d 445 (2007). Gall reminds us that “[t]he sentencing judge is in a superior position to find facts and judge their import under
I.
On May 11, 2004, Tomko pleaded guilty to a one-count information charging him with tax evasion in violation of
The United States District Court for the Western District of Pennsylvania conducted Tomko‘s sentencing hearing on September 30, 2005. Using the 1997 edition of the United States Sentencing Guidelines Manual, the District Court calculated Tomko‘s total offense level to be thirteen and his criminal history category to be I.2 Based on these calculations, the Guidelines recommended a range of imprisonment between twelve and eighteen months and a fine between $3,000 and $30,000.
Tomko, however, proposed that in light of the then-recent Hurricane Katrina catastrophe and his construction expertise, the Court should sentence him to probation and home detention, and require him to work for Habitat for Humanity. The Executive Director for Habitat for Humanity‘s Pittsburgh affiliate testified that the organization would appreciate Tomko‘s help in its efforts to rebuild the Gulf Coast and that Tomko had performed well in past projects, including providing onsite assistance and advice.
Finally, Tomko submitted a Motion for Downward Departure.3 The motion argued that Tomko should be sentenced below his Guidelines range because 1) his incarceration could cause Tomko, Inc.‘s innocent employees to lose their jobs; 2) he has performed exceptional charitable acts and good works; 3) he has demonstrated an extraordinary degree of acceptance of responsibility; and 4) a combination of these three factors. As exhibits, Tomko attached over fifty letters from family, friends, community leaders, and others attesting to his pre-indictment charitable activities and other good works.
After hearing these arguments and stating that it had reviewed all the motions and briefs that the parties submitted, the District Court stated its Guidelines calculations for the record and considered the sentencing factors listed in
I am to consider first the nature and circumstances of the offense, which are as follows.
The offense was not violent in nature.
The offense was not ongoing in nature.
The offense was not part of a larger pattern of criminal activity.
There are also no identifiable victims of the offense.
I am also to consider the history and characteristics of the Defendant. [The District Court here discussed Tomko‘s childhood, family, education, drinking problem, and prior criminal conviction for operating a boat while intoxicated.]
I am also going to consider the need for the sentence imposed to reflect the seriousness of the offense, promote respect for the law, and provide just punishment for the offense. Here, the Defendant has pled guilty to tax evasion, which is a serious offense.
I am to afford adequate deterrence to the Defendant‘s criminal conduct. Here, the Defendant has one prior criminal incident which is alcohol-related, but has otherwise led a crime-free life.
I am to protect the public from further crimes of this Defendant. Here, the Defendant has not been involved in oth
er crimes even though this is a serious offense here. The likelihood of recidivism in this case I find is very little. And to provide Defendant with needed educational/vocational training, medical care, or other correctional treatment in the most effective manner possible.
I am also to consider the kind of sentences available, including federal prison, house arrest, probation, and fines, which I am going to do.
I am to consider the need [to avoid] unwarranted sentence disparities among Defendants with similar records who have been found guilty of similar conduct. These considerations generally weigh in favor of sentencing a Defendant within the guideline range. However, this need to avoid unwarranted sentence disparities among Defendants with similar records also gives me enough leniency, though, to understand that there are differences and those differences have to be taken into account. I recognize the need for consistent sentencing; however, in this case, given the Defendant‘s lack of any significant criminal history, his involvement in exceptional charitable work and community activity, and his acceptance of responsibility, we find that a sentence that is mitigated by the factors of 3553[is] warranted.
In response, the Government insisted that the Court impose a sentence that included a term of imprisonment. The Government did not challenge Tomko‘s factual assertions or submissions. Instead, it juxtaposed his criminal conduct with the patriotism of American soldiers fighting wars abroad and argued that greed, not community service and philanthropy, defined Tomko‘s character. It focused on the fact that Tomko coerced his subcontractors to file false documentation, and highlighted the “gilded cage” nature of a sentence of home detention. The Government claimed that it would be “absurd” to sentence Tomko to live in the same multimillion dollar mansion that the illegally obtained tax monies helped fund. According to the Government, the Court‘s failure to incarcerate Tomko would send a message that a rich defendant can buy his way out of prison, and would compromise the general deterrent effect that tax laws have on potential tax cheats.
Despite the Government‘s arguments, the District Court did not sentence Tomko to a term of imprisonment. Instead, the Court sentenced Tomko to three years of probation (the first of which would be served as home detention), participation in an alcohol treatment program, 250 hours of community service, full restitution, and the statutory maximum fine of $250,000. The Court explained its sentence with the following colloquy:
The reason for the sentence is as follows: Defendant stands before us for sentencing after pleading guilty to tax evasion. A review of Defendant‘s financial condition paints a picture of a very wealthy man who had the means and wherewithal to easily pay whatever tax obligation is owing. He was a successful businessman earning a significant salary. There is simply no reason for him to have done this.
This being said, I also note his negligible criminal history, his record of employment, his support for and ties in the community, and the extensive charitable work he has done. I have also therefore, I have sentenced him to the period of probation, which I recognize is below the guideline range. I also recognize that the fine is above the guideline range. Given the Defendant‘s wealth, the guideline range in fines is insufficient deterrence.
Therefore, I‘ve done this mitigation of the sentence under the provisions set
forth in 18 U.S.C. [§] 3553 for the reasons I stated. Taking all these factors into account, the Court sentences the Defendant to a period of probation, a substantial fine, and allows for repayment to the Internal Revenue Service of his outstanding tax obligation. The Court views that this sentence will address the sentencing goals of punishment, deterrence and rehabilitation.
The Government filed a timely appeal.5
II.
A.
Before the implementation of a Guidelines-based sentencing system in 1984, “[s]tatutes specified the penalties for crimes but nearly always gave the sentencing judge wide discretion to decide whether the offender should be incarcerated and for how long, whether he should be fined and how much, and whether some lesser restraint, such as probation, should be imposed instead of imprisonment or fine.” Mistretta v. United States, 488 U.S. 361, 363 (1989). Reviewing courts, in turn, recognized “that the sentencing judge ‘sees more and senses more’ than the appellate court; thus, the judge enjoyed the ‘superiority of his nether position,’ for that court‘s determination as to what sentence was appropriate met with virtually unconditional deference on appeal.” Id. at 364 (quoting Maurice Rosenberg, Judicial Discretion of the Trial Court, Viewed From Above, 22 Syracuse L.Rev. 635, 663 (1971)). According to the Supreme Court, appellate review “beg[an] with the general proposition that once it is determined that a sentence is within the limitations set forth in the statute under which it is imposed, appellate review is at an end.” Dorszynski v. United States, 418 U.S. 424, 431 (1974).
Concerns over sentencing disparities and the continued viability of rehabilitation as a penological objective dogged this sentencing system. Mistretta, 488 U.S. at 365. As a result, in 1984, Congress passed the Sentencing Reform Act which, among other things, established mandatory sentencing guidelines. Id. at 365-67. This Act, however, “did not alter a court of appeals’ traditional deference to a district court‘s exercise of its sentencing discretion.” Williams v. United States, 503 U.S. 193, 205 (1992). As the Supreme Court explained in Williams, “[t]he development of the guideline sentencing regime has not changed our view that, except to the extent specifically directed by statute, ‘it is not the role of an appellate court to substitute its judgment for that of the sentencing court as to the appropriateness of a particular sentence.‘” Id. (quoting Solem v. Helm, 463 U.S. 277, 290 n. 16 (1983)).
In United States v. Booker, 543 U.S. 220 (2005), the Supreme Court concluded that the Sentencing Guidelines could only be advisory, id. at 245, and instructed courts of appeals to review the sentencing court‘s “broad discretion in imposing a sentence within a statutory range,” id. at 233, for “unreasonableness,” id. at 260-61. Subsequently, Gall made it plain that we assess unreasonableness under the abuse-of-discretion standard. 128 S.Ct. at 591.
B.
As the Court mentioned in Gall, the abuse-of-discretion standard is “famil
Two basic principles underlie the application of the abuse-of-discretion standard. First, “deferential review is used when the matter under review was decided by someone who is thought to have a better vantage point than we on the Court of Appeals to assess the matter.” United States v. Mitchell, 365 F.3d 215, 234 (3d Cir.2004). Accordingly, the Supreme Court has applied the abuse-of-discretion standard where it “noted that deference was owed to the ‘judicial actor ... better positioned than another to decide the issue in question.‘” Koon v. United States, 518 U.S. 81, 98, 99 (1996) (quoting Pierce v. Underwood, 487 U.S. 552, 559-60 (1988)); see also Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 401–05 (1990) (reviewing Rule 11 sanctions for an abuse of discretion because “the district court is better situated than the court of appeals to marshal the pertinent facts and apply the fact-dependent legal standard mandated by Rule 11“); Pierce, 487 U.S. at 559-63 (holding that attorney‘s fee awards under the Equal Access to Justice Act should be reviewed for an abuse of discretion). As one leading commentator has put it, “[i]n the dialogue between the appellate judges and the trial judge, the former often would seem to be saying: ‘You were there. We do not think we would have done what you did, but we were not present and we may be unaware of significant matters, for the record does not adequately convey to us all that went on at the trial. Therefore, we defer to you.‘” Rosenberg, supra, at 663.
Second, courts of appeals apply the abuse-of-discretion standard to fact-bound issues that are ill-suited for appellate rule-making. As the Supreme Court explained in Pierce:
One of the ‘good’ reasons for conferring discretion on the trial judge is the sheer impracticability of formulating a rule of decision for the matter in issue. Many questions that arise in litigation are not amenable to regulation by rule because they involve multifarious, fleeting, special, narrow facts that utterly resist generalization—at least, for the time being.
487 U.S. at 561-62 (quoting Rosenberg, supra, at 662); see also Cooter & Gell, 496 U.S. at 405 (“‘Fact-bound resolutions cannot be made uniform through appellate review, de novo or otherwise.‘” (quoting Mars Steel Corp. v. Cont‘l Bank N.A., 880 F.2d 928, 936 (7th Cir.1989))).
Post-Booker, the sentencing court‘s superior vantage point has been the oft-cited reason for applying the abuse-of-discretion standard to sentencing review. In Gall, the Court emphasized that “[t]he sentencing judge is in a superior position to find facts and judge their import under
In the wake of Booker, it is essential that district courts make an “individualized assessment based on the facts presented.” Gall, 128 S.Ct. at 597. In doing so, it is equally important that district courts provide courts of appeals with an explanation “sufficient for us to see that the particular circumstances of the case have been given meaningful consideration within the parameters of
District courts must provide their explanations and justifications while going through three steps at sentencing. As we outlined in Levinson:
A district court must begin the process by first calculating the applicable Guidelines range. After that initial calculation, the court must then rule on any motions for departure and, if a motion is granted, state how the departure affects the Guidelines calculation. Finally, after allowing the parties an opportunity for argument, the court must consider all of the
§ 3553(a) factors and determine the appropriate sentence to impose, which may vary from the sentencing range called for by the Guidelines.
Id. at 194-95. “Thus, the sentencing court subjects the defendant‘s sentence to the thorough adversarial testing contemplated by federal sentencing procedure.” Rita, 127 S.Ct. at 2465.
Our appellate review proceeds in two stages. It begins by “ensur[ing] that the district court committed no significant procedural error, such as failing to calculate (or improperly calculating) the Guidelines range, treating the Guidelines as mandatory, failing to consider the
The abuse-of-discretion standard applies to both our procedural and substantive reasonableness inquiries. Gall, 128 S.Ct. at 597; United States v. Wise, 515 F.3d 207, 217-18 (3d Cir.2008). For example, an abuse of discretion has occurred if a district court based its decision on a clearly erroneous factual conclu
Ultimately, “[t]he touchstone of ‘reasonableness’ is whether the record as a whole reflects rational and meaningful consideration of the factors enumerated in
III.
The Government makes only one claim of procedural error: it argues that the District Court failed to meaningfully consider general deterrence. Based on our review of the record, we cannot agree. A sentencing court does not have to “discuss and make findings as to each of the
A lengthy term of incarceration is also important for something you didn‘t mention in what you just went through, and that‘s third party deterrence, particularly in this industry. In this case, if this case is any indication, this contracting industry is riddled, riddled with tax fraud. A sentence of probation tells this industry: Go ahead, cheat on your taxes. If you get caught, you‘ll have to pay some money, but you won‘t have to go to prison. You won‘t have to go to jail.
Our tax system, Your Honor, is dependent on the honesty of our citizenry, and a lengthy term of incarceration for this tax cheat validates that system. A sentence of probation invalidates that system. We need to [deter] this type of crime, Your Honor; and the threat of jail is real for these white collar criminals that commit tax fraud.
What we need to do is make good on that threat. That threat, if it simply isn‘t followed through on, is just a threat. It‘s not real deterrence. Real deterrence is jail. That‘s what makes people like Mr. Tomko think before they sign that bogus tax return, before they
cheat on their taxes. They see it in the paper: Tax cheats go to jail. Maybe they‘ll think next time they sign that tax return.
Almost immediately after the Government made these statements, the District Court sentenced Tomko. The District Judge noted that he viewed Tomko‘s sentence as “address[ing] the sentencing goals of punishment, deterrence and rehabilitation.” (Emphasis added.) This demonstrates that the District Court heard the Government‘s impassioned plea, considered general deterrence, and handed down Tomko‘s sentence.8 Therefore, we conclude that the District Court did not commit any procedural error at Tomko‘s sentencing. See Rita, 127 S.Ct. at 2468 (“In our view, given the straightforward, conceptually simple arguments before the judge, the judge‘s statement of reasons here, though brief, was legally sufficient.“).
IV.
The crux of the Government‘s appeal is its claim that Tomko‘s sentence is substantively unreasonable. At oral argument, the Government reaffirmed that it would not be satisfied even if the District Court corrected the alleged procedural error on remand, but imposed the same sentence. In the Government‘s view, Tomko‘s sentence is substantively unreasonable because 1) detention in the house that Tomko partially funded with the illegal tax proceeds is plainly unreasonable, 2) this is a mine-run tax evasion case undeserving of such a lenient sentence, and 3) the statutory maximum fine cannot cure the claimed substantive deficiencies.
We reject the Government‘s first and third arguments with limited discussion. Concerning the first, the Government has narrowed its objections to too fine a point by focusing its objections solely on the location of Tomko‘s home detention. The Government admitted at oral argument that had the District Court sentenced Tomko to serve his detention in a different house—for example, as the Government suggested, “one of those Habitat for Humanity buildings that he was building in New Orleans could do,” (Tr. of Oral Argument 23)—it may not have appealed. Although we agree with the Government that the sort of “gilded cage” confinement imposed here has a certain unseemliness to it, we do not believe that this condition of sentence, by itself, constitutes an abuse of discretion. Whether detention in a particular home is appropriate punishment is precisely the type of fact-bound inquiry that a sentencing court is better suited to make. Even the Guidelines leave this determination to the sound discretion of the sentencing court. See
The Government‘s final argument—that this is an overly lenient sentence in a mine-run case—deserves more attention. At the outset, we address the Government‘s characterization of this case as a “mine-run” case. To the extent that the typicality or uniqueness of a case is relevant, the Supreme Court has made clear that it does not alter our deferential standard of review when evaluating a district court‘s sentencing determination. To that end, the Court observed in Gall that:
[I]t has been uniform and constant in the federal judicial tradition for the sentencing judge to consider every convicted person as an individual and every case as a unique study in the human failings that sometimes mitigate, sometimes magnify, the crime and punishment to ensue. The uniqueness of the individual case, however, does not change the deferential abuse-of-discretion standard of review that applies to all sentencing decisions.
128 S.Ct. at 598 (internal quotation omitted). Such deference acknowledges the district court‘s “institutional advantage over appellate courts,” id. at 598, or what the Court in Gall labeled the “[p]ractical considerations,” id. at 597. Accordingly, we must apply the abuse-of-discretion standard uniformly, regardless of whether a particular case appears to be a “mine-run” case on appeal.
The Government points out that “closer review may be in order when the sentencing judge varies from the Guidelines based solely on the judge‘s view that the Guidelines range fails to properly reflect
In essence, the Government is asking this Court to apply the already-rejected “proportionality test” by a different name. The Government‘s appeal boils down to a claim that Tomko‘s criminal history, employment record, community ties, and charitable works do not differentiate him enough from the “mine-run” tax evasion case to justify his below-Guidelines sentence. Similarly, a “proportionality test” rests on “the proposition that the strength of the justification needed to sustain an outside-Guidelines sentence varies in proportion to the degree of the variance.” Rita, 127 S.Ct. at 2467. As applied by some courts of appeals, this meant that “a sentence that constitute[d] a substantial variance from the Guidelines [had to] be justified by extraordinary circumstances.” Gall, 128 S.Ct. at 591. In Gall, the Supreme Court explicitly barred the application of such an approach because it necessarily applies a “heightened standard of review to sentences outside the Guidelines range.” Id. at 596. That, of course, is “inconsistent with the rule that the abuse-of-discretion standard of review applies to all sentencing decisions—whether inside or outside the Guidelines range.” Id.
To be sure, “we may look for a more complete explanation to support a sentence that varies from the Guidelines than we will look for when reviewing a sentence that falls within a properly calculated Guidelines range.” Levinson, 543 F.3d at 197. We may also properly consider “the extent of any variance from the Guidelines range.” Gall, 128 S.Ct. at 597. As the Supreme Court has explained, “it [is] uncontroversial that a major departure should be supported by a more significant justification than a minor one.” Id. This does not mean, however, that we elevate our review of any variance and its accompanying explanation or justification beyond the abuse-of-discretion standard. The Supreme Court has unequivocally stated that “courts of appeals must review all sentences—whether inside, just outside, or significantly outside the Guidelines range—under a deferential abuse-of-discretion standard.” Id. at 591. We must remain faithful to that clear instruction.
Based on our review of the record, we conclude that the District Court did not abuse its discretion here. At Tomko‘s sentencing hearing, the District Court explicitly examined subsections
The District Court‘s reasons are also “logical and consistent with the factors set forth in section 3553(a).” Cooper, 437 F.3d
Additionally, at Tomko‘s sentencing proceeding, the Executive Director of Habitat for Humanity‘s Pittsburgh affiliate testified on Tomko‘s behalf. The Executive Director stated that the Pittsburgh affiliate had been in danger of being closed down by the national Board of Directors because of its precarious financial situation. The Executive Director testified that Tomko became personally involved in the construction and rehabilitation of several houses in the Pittsburgh area. Again, Tomko devoted not only a portion of his wealth, but also his personal time. The Executive Director stated that, for one house that had water runoff problems, “Mr. Tomko came and not only visited with the homeowner, inspected the basement to see what was the matter with the outside of the house, but also worked with the city to determine how best to redirect the water away from the yards. He put in the grading, he completed the front sidewalk, the back driveway, and put in a curb for the city.” The Executive Director gave other examples of Tomko‘s providing his construction expertise to aid the Pittsburgh affiliate. The Executive Director then testified as to how Tomko could benefit Habitat for Humanity‘s efforts to build houses for poor families whose residences were damaged or destroyed by Hurricane Katrina. The Executive Director of the New Orleans affiliate confirmed that Tomko would be useful in these efforts. The Pittsburgh Executive Director concluded her direct testimony by reading a portion of a letter she wrote to the District Court, which stated that “there is no one like Bill Tomko who provides timely, unselfish, and meaningful contributions to Pittsburgh Habitat for Humanity‘s construction operations.”10
It bears mentioning that the District Court‘s variance here was not substantial. The difference between Tomko‘s actual sentence and the lower end of his Guidelines range is twelve months. Calling it a 100-percent variance is misleading. As Gall points out, “deviations from the Guidelines range will always appear more extreme—in percentage terms—when the range itself is low, and a sentence of probation will always be a 100% departure....” 128 S.Ct. at 595. Additionally, “quantifying the variance as a certain percentage of the maximum, minimum, or median prison sentence recommended by the Guidelines gives no weight to the ‘substantial restriction of freedom’ involved in a term of supervised release or probation.” Id. (citation omitted).
We cannot say that, in absolute terms, the variance here was so large that it was per se unreasonable. In Gall, the Supreme Court affirmed a district court‘s probationary sentence where the advisory Guidelines range was thirty to thirty-seven months of imprisonment. 128 S.Ct. at 593. Similarly, post-Gall, a number of courts of appeals, including our own, have affirmed sentences that involved greater variances or departures than the one here. See, e.g., Howe, 543 F.3d at 130 (affirming a probationary sentence where the Guidelines range was eighteen to twenty-four months of imprisonment); see also United States v. Gardellini, 545 F.3d 1089, 1094 n. 5 (D.C.Cir.2008) (collecting cases).12 “It will be a rare case when it is clear that no acceptable reasoning can justify a given sentence.” Levinson, 543 F.3d at 195. This is not one of them.
The Government claims that affirming Tomko‘s sentence promotes sentencing disparities and, in turn, undermines general deterrence. Whatever the merits of this possibility, it does nothing to change our disposition. The Government‘s concern is not new; it has been a point of constant focus throughout sentencing review‘s evolution. Before the Guidelines existed, “[s]erious disparities in sentences ... were common.” Mistretta, 488 U.S. at 365. When Congress created the mandatory Guidelines system, it did so “to provide certainty and fairness in meeting the purposes of sentencing, [while] avoid
Despite that awareness, the Booker Court was confident that the advisory Guidelines system would “continue to move sentencing in Congress’ preferred direction, helping to avoid excessive sentencing disparities while maintaining flexibility sufficient to individualize sentences where necessary.” Id. at 264-65. In Gall, the Court reaffirmed that “a more deferential abuse-of-discretion standard could successfully balance the need to ‘reduce unjustified disparities’ across the Nation and ‘consider every convicted person as an individual.‘” 128 S.Ct. at 598 n. 8 (quoting Koon, 518 U.S. at 113).
If abuse-of-discretion review cannot strike such a balance, it is not our role as appellate judges to adjust the scales. “The National Legislature is equipped to devise and install, long term, the sentencing system, compatible with the Constitution, that Congress judges best for the federal system of justice.” Booker, 543 U.S. at 265; see also Gall, 128 S.Ct. at 603 (Souter, J., concurring) (“I continue to think that the best resolution of the tension between substantial consistency throughout the system and the right of jury trial would be a new Act of Congress: reestablishing a statutory system of mandatory sentencing guidelines (though not identical to the original in all points of detail), but providing for jury findings of all facts necessary to set the upper range of sentencing discretion.“). The risk of affirming an unwarranted sentencing disparity in this case is one we must accept while following the Supreme Court‘s “pellucidly clear” command that we apply the abuse-of-discretion standard of review. Gall, 128 S.Ct. at 594.
Our decision today should not suggest that variances of the size and character of Tomko‘s will always be substantively reasonable. District courts must make sentencing determinations on an individualized basis. See Gall, 128 S.Ct. at 597. Accordingly, the substantive reasonableness of each sentence must be evaluated on its own terms, based on the reasons that the district court provided, in light of the particular facts and circumstances of that case. As we recognized in Howe, “the point is that each case must be reviewed on its own....” 543 F.3d at 141.
In sum, a significant number of us, if we were sitting as the district judge, might have applied the
V.
In order for the Guidelines regime to be truly advisory, a district court must be potentially able, when the proper situation
Our holding in this case is not an exercise in self-abnegation. Courts of appeals unquestionably have an important role to play in reviewing district courts’ sentencing decisions. But it is a limited role. Neither Gall nor Rita suggests that courts of appeals should do anything more than ensure the reasonableness of federal sentences. It bears repeating that “[t]he touchstone of ‘reasonableness’ is whether the record as a whole reflects rational and meaningful consideration of the factors enumerated in
We must be mindful that the Sentencing Guidelines “reflect a rough approximation of sentences that might achieve
FISHER, Circuit Judge, dissenting, with whom Chief Judge SCIRICA, Judge SLOVITER, Judge RENDELL and Judge COWEN join.
I.
As the procedural history of this appeal clearly shows, this Court has wrestled with the decision in this case for close to two and one half years, during which time the judges on this Court have tried to determine whether the sentence given for this crime was substantively reasonable. The offense we encounter in this case is no garden variety tax evasion. The conduct underlying the offense involved an intricate scheme spanning several years and involved the coercion and coordination of
Tomko‘s fraudulent tax evasion scheme revolved around the construction of his luxurious new home in southwestern Pennsylvania. During the construction of this home, Tomko had subcontractors falsify their billing invoices to make it appear their work had been done for his construction company, W.G. Tomko, Inc. (“Tomko, Inc.“), at one of its job sites, rather than for Tomko, the individual, at his personal residence. The Internal Revenue Service-Criminal Investigation Division investigators interviewed seventeen individuals with respect to Tomko‘s scheme. While the details varied from individual to individual, a consistent pattern of conduct emerged: At Tomko‘s behest, subcontractors who performed work at his residence were instructed to write billing invoices that made it appear that their work had been done at one of five local area schools. Because Tomko, Inc. was working jobs at these local schools, the company could appear to be legitimately paying the invoices.13 As a result, the construction costs were diverted from Tomko personally to Tomko‘s company, which then deducted them as business expenses, while Tomko also failed to report as personal income the value of the services provided to him at no cost. Thus, Tomko‘s income was under-represented in two regards: The profits earned by his business appeared to be less and the substantial benefit he received as a result of the construction of a new 8,000-square-foot home went unreported.14
Tomko‘s scheme resulted in a stipulated tax deficiency of $228,557; however, a disputed portion of the record included evidence that the pervasiveness of his scheme was even more extensive. In particular, the Government presented evidence that Tomko on more than one occasion told individuals that his vacation home in Maryland was “a gift from Uncle Sam.” Because the Government was unable to provide reliable figures to account for the impact of this alleged fraud with respect to the tax loss incurred by the Government, this disputed evidence apparently did not factor into the District Court‘s judgment of sentence, and we mention it solely to underscore the point that we are not faced with a garden variety case of tax evasion.
Tomko pleaded guilty to a one-count information charging him with tax evasion, in violation of
The District Court then sentenced Tomko to 250 hours of community service, three years of probation with one year of home confinement, and ordered him to pay a fine of $250,000. Tomko was also ordered to undergo twenty-eight days of in-house alcohol treatment. As reason for this judgment, the District Court stated:
“Defendant stands before us for sentencing after pleading guilty to tax evasion. A review of the Defendant‘s finan
cial condition paints a picture of a very wealthy man who had the means and the wherewithal to easily pay whatever tax obligation is owing. He was a successful businessman earning a significant salary. There is simply no reason for him to have done this. This being said, I also note his negligible criminal history, his record of employment, his support for and ties in the community, and extensive charitable work he has done. I have also therefore, I have sentenced him to a period of probation, which I recognize is below the guideline range. Given the Defendant‘s wealth, the guideline range in fines is insufficient deterrence.
Therefore, I‘ve done this mitigation of the sentence under the provisions set forth in
18 U.S.C. § 3553 for the reasons I stated. Taking all these factors into account, the Court sentences the Defendant to a period of probation, a substantial fine, and allows for repayment to the Internal Revenue Service of his outstanding tax obligation. The Court views that this sentence will address the sentencing goals of punishment, deterrence and rehabilitation.”
As this excerpt demonstrates, the District Court recognized that the sentence was below the Guidelines and did not include a term of imprisonment, but explained that it had mitigated the sentence for its stated reasons in conjunction with the factors set forth in
In accordance with the standard announced by the Supreme Court in United States v. Booker, 543 U.S. 220, 125 S.Ct. 738, 160 L.Ed.2d 621 (2005), our task on appeal is to review the sentence imposed by the District Court for “reasonableness.”16 In Gall v. United States, 552 U.S. 38, 128 S.Ct. 586, 597, 169 L.Ed.2d 445 (2007), the Supreme Court clarified that appellate reasonableness review involves two steps: the first procedural and the second substantive. The Supreme Court categorized, inter alia, “failing to consider the
“Assuming that the district court‘s sentencing decision is procedurally sound, the appellate court should then consider the substantive reasonableness of the sentence imposed under an abuse-of-discretion standard. When conducting this review, the court will, of course, take into account the totality of the circumstances, including the extent of any variance from the Guidelines range. If the
sentence is within the Guidelines range, the appellate court may, but is not required to, apply a presumption of reasonableness. But if the sentence is outside the Guidelines range, the court may not apply a presumption of unreasonableness. It may consider the extent of the deviation, but must give due deference to the district court‘s decision that the
Id. (internal citation omitted) (emphasis added); accord United States v. Wise, 515 F.3d 207, 217-18 (3d Cir. 2008) (“As an appellate court, our role is two-fold. . . . If we determine that the district court has committed no significant procedural error, we then review the substantive reasonableness of the sentence under an abuse-of-discretion standard. . . .“).
The Court in Gall also reaffirmed its decision in Rita v. United States, 551 U.S. 338, 127 S. Ct. 2456, 168 L. Ed. 2d 203 (2007), which emphasized the importance of reviewing sentences for substantive reasonableness. See Gall, 128 S. Ct. at 596-98. As the Supreme Court stated in Rita: “In sentencing, as in other areas, district judges at times make mistakes that are substantive. At times, they will impose sentences that are unreasonable. Circuit courts exist to correct such mistakes when they occur.” 127 S. Ct. at 2466-67. Consequently, the substantive component of reasonableness review, while deferential, is not impotent.
For these reasons, we disagree with the Majority‘s statement that “if the district court‘s sentence is procedurally sound, we will affirm it unless no reasonable sentencing court would have imposed the same sentence on that particular defendant for the reasons the district court provided.” Majority Op. at Part II.C. We recognize that “appellate review of sentencing decisions is limited to determining whether they are ‘reasonable,‘” Gall, 128 S. Ct. at 594, but we believe that encompassed within this limited role is the authority and the obligation to vacate sentences that are substantively unreasonable. Therefore, although the Supreme Court “made it pellucidly clear that the familiar abuse-of-discretion standard of review now applies to appellate review of sentencing decisions,” id., we cannot agree with the Majority‘s characterization of the appellate courts’ role in reviewing sentences as “requir[ing] us to do nothing more and nothing less than to apply the deferential abuse-of-discretion standard.” Majority Op. at Part V. We believe that when the Supreme Court instructed appellate courts to review for both procedural and substantive reasonableness, it meant what it said. Accordingly, because we conclude that this sentence is substantively unreasonable, we dissent.
II.
This case presents the opportunity for us to examine the implications of the Supreme Court‘s directive in Gall that in reviewing for reasonableness, appellate courts are to conduct a substantive inquiry as well as a procedural one. We are not the first court of appeals which has wrestled with the concept of engaging in a deferential review of the substantive reasonableness of sentences. See, e.g., United States v. Cavera, 550 F.3d 180, 191 (2d Cir. 2008) (“At the substantive stage of reasonableness review we consider whether the factor, as explained by the district court, can bear the weight assigned it under the totality of circumstances in the case. . . . Accordingly, we will continue to patrol the boundaries of reasonableness, while heeding the Supreme Court‘s renewed message that responsibility for sentencing is placed largely in the precincts of the district courts.“); United States v. Taylor, 532 F.3d 68, 69-70 (1st Cir. 2008) (explaining its view that although district courts are “empowered with considerable discretion in sentencing,” recent Supreme Court decisions have also “underscored the importance of the district court‘s justifications” for sentencing decisions); United States v. Abu Ali, 528 F.3d 210, 265 (4th Cir. 2008) (“While Gall assuredly made clear the limited and deferential role of appellate courts in the sentencing process, see [128 S. Ct.] at 597-98, it was not a decision wholly without nuance or balance.“). The Court of Appeals for the Eleventh Circuit provided the following explanation post-Gall:
“[Gall‘s] directives leave no doubt that an appellate court may still overturn a substantively unreasonable sentence, albeit only after examining it through the prism of abuse of discretion, and that appellate review has not been extinguished. Thus, a sentence still may be substantively unreasonable if it does not achieve the purposes of sentencing stated in
§ 3553(a) . So, even though we afford ‘due deference to the district court‘s decision that the§ 3553(a) factors, on a whole, justify the extent of the variance,’ Gall, 128 S. Ct. at 597, we may find that a district court has abused its considerable discretion if it has weighed the factors in a manner that demonstrably yields an unreasonable sentence. We are therefore still required to make the calculus ourselves, and are obliged to remand for resentencing if we are left with the definite and firm conviction that the district court committed a clear error of judgment in weighing the§ 3553(a) factors by arriving at a sentence that lies outside the range of reasonable sentences dictated by the facts of the case.”
United States v. Pugh, 515 F.3d 1179, 1191 (11th Cir. 2008) (select internal quotation marks and citations omitted).
We agree wholeheartedly with the reasoning expressed by our sister circuits. If the substance of a sentence is not “logical and consistent” with the
III.
The Government, as the appellant in this case, bears the burden of establishing that the sentence imposed is unreasonable in light of both the record and the
A.
As an initial matter, we address the Government‘s argument that Tomko‘s sentence was procedurally unreasonable because the District Court failed to consider general deterrence in arriving at its sentencing decision. We find this argument unavailing. Although the District Court never expressly mentioned general deterrence, the Majority correctly notes that a sentencing court is not required to “discuss and make findings as to each of the
And while our task of reviewing the reasonableness of a sentence would be aided by a more explicit analysis of the District Court‘s consideration of deterrence, whether specific or general, ultimately this perceived procedural deficiency is not at the root of the sentence‘s unreasonableness. As the Government acknowledged at oral argument, even if the sentence was vacated and remanded to the District Court in order to remedy this alleged procedural error, if the District Court nonetheless imposed the same sentence, the Government would still maintain that the sentence was unreasonable. Thus, it is not the District Court‘s failure to expressly consider general deterrence that causes us to doubt the reasonableness of the sentence so much as the “totality of the circumstances” surrounding the District Court‘s decision and the “extent of . . . variance from the Guidelines range.” Gall, 128 S. Ct. at 597. Accordingly, although we may question whether the sentence the District Court imposed reflects the sentencing goal of deterrence, under Gall‘s two-step framework, this concern relates to the substantive reasonableness of the sentence as opposed to its procedural reasonableness.
B.
Based on the guidance that the Supreme Court in Gall provided to appellate courts with respect to engaging in substantive reasonableness review, we begin our task by looking to the Sentencing Guidelines. See id. (“When conducting this review, the court will, of course, take into account the totality of the circumstances, including the extent of any variance from the Guidelines range. If the sentence is within the Guidelines range, the appellate court may, but is not required to, apply a presumption of reasonableness. But if the sentence is outside the Guidelines range, the court may not apply a presumption of unreasonableness.” (internal citation omitted)); see also Taylor, 532 F.3d at 70 (“[T]he guidelines are the starting point for the fashioning of an individualized sentence, so a major deviation from them must be supported by a more significant justification than a minor one.” (quoting Gall, 128 S. Ct. at 597) (select internal quotation marks omitted)).17
And although the Guidelines are advisory, they must still be afforded due weight as a factor under
Indeed, the Guidelines continue to be a vital force in sentencing as they “reflect a rough approximation of sentences that might achieve
As numerous courts have recognized, the Guidelines serve a particularly important purpose in the area of white-collar crime. For instance, the Supreme Court in Mistretta v. United States, 488 U.S. 361, 375 n. 9, 109 S. Ct. 647, 102 L. Ed. 2d 714 (1989), noted that the Senate Report on the Sentencing Reform Act “gave specific examples of areas in which prevailing sentences might be too lenient, including the treatment of major white-collar criminals.” Accord United States v. Ebbers, 458 F.3d 110, 129 (2d Cir. 2006) (“[T]he Guidelines reflect Congress’ judgment as to the appropriate national policy for [white-collar] crimes . . . .“); United States v. Mueffelman, 470 F.3d 33, 40 (1st Cir. 2006) (noting the importance of “the minimization of discrepancies between white- and blue-collar offenses“). In United States v. Martin, the Court of Appeals for the Eleventh Circuit provided the following explanation:
“Our assessment is consistent with the views of the drafters of
§ 3553 . As the legislative history of the adoption of§ 3553 demonstrates, Congress viewed deterrence as ‘particularly important in the area of white collar crime.’ S.Rep. No. 98-225, at 76 (1983), reprinted in 1984 U.S.C.C.A.N. 3182, 3259. Congress was especially concerned that prior to the Sentencing Guidelines, ‘[m]ajor white collar criminals often [were] sentenced to small fines and little or no imprisonment. Unfortunately, this creates the impression that certain offenses are punishable only by a small fine that can be written off as a cost of doing business.’ Id.”
455 F.3d 1227, 1240 (11th Cir. 2006).
In light of the important position that the Guidelines continue to occupy in sen
Consistent with the Supreme Court‘s instructions in Gall, although we “may consider the extent of the deviation, [we] must give due deference to the district court‘s decision that the
1.
The District Court concluded that a significant downward variance was merited in Tomko‘s case because of his: (1) negligible criminal history; (2) record of employment; and (3) support for the community and extensive charitable work. Under
Similarly, in some cases it is appropriate for the sentencing court to consider the defendant‘s record of employment as a mitigating factor under
Finally, the District Court relied heavily on Tomko‘s community ties and purportedly extensive charitable work. It reviewed more than fifty letters of support, most of which paint a picture of Tomko as a man with great concern for his employees and his community. Some attest to truly admirable acts of kindness. Similarly, the Majority discusses at length the evidence pertaining to Tomko‘s philanthropic acts. See Majority Op. at Part IV. However, the Guidelines provide that a defendant‘s prior good works — such as civic, charitable, or public service — are “not ordinarily relevant,” and discourage downward departures from the normal sentencing range based on these types of considerations. See
The Government views the letters written in support of Tomko with jaundiced eyes, noting that many, if not most, of these letters were from Tomko‘s own employees and that one might expect such individuals to be easily “persuaded” to pen arguably overwrought letters of support and concern. We find it unnecessary to weigh in with our own cynical speculations as to the underlying motives of the authors of these letters, as we find that Tomko‘s
Viewed cumulatively, out of the three reasons offered by the District Court for mitigating Tomko‘s sentence, only one — community support based on charitable work — even begins to justify a downward variance in this case. Thus, these considerations fall short of placing the sentence imposed within the albeit broad range of permissible choices, even when we add them together. Moreover, the “mitigating” circumstances relied upon by the District Court only address one of the
2.
Viewed cumulatively, we conclude that the relevant
Under
The Government argues that in this case “real deterrence is jail,” and this position finds support in United States v. Ture, 450 F.3d 352 (8th Cir. 2006). The underlying facts of Ture and our own case are nearly identical. Ture, like Tomko, induced others to disguise income as deductible corporate expenses. Id. at 354. This failure to report funds as income led to a tax deficiency of $240,252 in Ture‘s case, id. at 355, whereas in Tomko‘s case the stipulated tax deficiency was $228,557. Additionally, in both cases the Guidelines range was twelve to eighteen months, and both
We find the reasoning of Ture persuasive. The sentence in this case, like the sentence in Ture, represents “in effect, a 100% downward variance from the Guidelines range,” id. at 357, which means that Tomko avoids serving any time in a federal prison. Moreover, Tomko‘s sentence of probation included home confinement in the very mansion built through the fraudulent tax evasion scheme at issue in this case — an 8,000-square-foot house on approximately eight acres, with a home theater, an outdoor pool and sauna, a full bar, $1,843,500 in household furnishings, and $81,000 in fine art. The perverse irony of this gilded cage confinement was not lost on the Government, it is not lost on us, and it would not be lost on any reasonable public observer of these proceedings, including those would-be offenders who may be contemplating the risks associated with willful tax evasion. Accordingly, we find that the sentence imposed by the District Court fails to reflect the seriousness of the offense, promote respect for the law, provide just punishment for the offense, and afford adequate deterrence to criminal conduct, and therefore is inconsistent with the sentencing goals outlined in
Under
“Under pre-guidelines sentencing practice, courts sentenced to probation an inappropriately high percentage of offenders guilty of certain economic crimes, such as theft, tax evasion, antitrust offenses . . . that in the Commission‘s view are ‘serious.’ The Commission‘s solution to this problem has been to write guidelines that classify as serious many offenses for which probation previously was frequently given and provide for at least a short period of imprisonment in such cases.”
“Criminal tax prosecutions serve to punish the violator and promote respect for the tax laws. Because of the limited number of criminal tax prosecutions relative to the estimated incidence of such violations, deterring others from violating the tax laws is a primary consideration underlying these guidelines. Recognition that the sentence for a criminal tax case will be commensurate with the gravity of the offense should act as a deterrent to would-be violators.”
Section
“Under pre-guidelines practice, roughly half of all tax evaders were sentenced to probation without imprisonment, while the other half received sentences that required them to serve an average prison term of twelve months. This guideline is intended to reduce disparity in sentencing for tax offenses and to somewhat increase average sentence length. As a result, the number of purely probationary sentences will be reduced.”
The District Court stated on the record that “it recognized the need for consistent sentencing” but imposed a sentence that contributes to, rather than reduces, the marked disparity that Congress and the Commission sought to avoid. The District Court‘s use of a substantial fine to counterbalance its decision not to impose a term of imprisonment is inconsistent with Congress‘s clear intent, as expressed in the Sentencing Reform Act and
In sum, our review leads us to conclude that the
We reiterate that we do not maintain that any below-Guidelines sentence would have been improper in this case, only that the District Court exceeded its discretion in rendering this particular below-Guidelines sentence. See Abu Ali, 528 F.3d at 265 (“While we take exception to the sentence‘s degree of deviation for the reasons we discuss, we do not seek to deprive the district court of discretion upon remand. Rather, our difference with the sentencing court here is based on the fact that the specific justifications offered were not ‘sufficiently compelling to support the degree of the variance.‘” (quoting Gall, 128 S. Ct. at 597)).25 Indeed, any number of facts could have been present in the record to place the District Court‘s sentence within the range of reasonable choices. But none of those facts existed here. At the same time, we need not articulate in speculative fashion the precise facts that would render a non-imprisonment sentence reasonable. Suffice it to say, this dissent would not close the door on the ability of facts not in Tomko‘s record to support significant downward variances in future cases. We would leave ample room for the District Court‘s discretion, but “discretion, like the hole in the doughnut, does not exist except as an area left open by a surrounding belt of restriction.” Compagnie des Bauxites de Guinea v. Ins. Co. of N. Am., 651 F.2d 877, 884 (3d Cir. 1981) (quoting R. Dworkin, Taking Rights Seriously 31 (1977)).
Finally, we provide some commentary to highlight the differences between Gall and this case. Brian Gall was convicted of conspiracy to distribute ecstasy while a second-year college student at the University of Iowa. Notably, within six months of joining the conspiracy, Gall withdrew therefrom and stopped selling illegal drugs of any kind at that time. Upon graduation, Gall obtained employment earning $18 per hour as a master carpenter. The district court stated that Gall “self-rehabilitated” and sentenced him to probation for a term of 36 months. The court of appeals vacated the sentence as unreasonable.
The Supreme Court, in reversing the court of appeals, stated that “[t]he Government‘s legitimate concern that a lenient sentence for a serious offense threatens to promote disrespect for the law is at least to some extent offset by the fact that seven of the eight defendants in this case have been sentenced to significant prison terms.” 128 S. Ct. at 599. No such offset is present here, as Tomko was the head or lead offender and beneficiary of his offense. Deterrence and respect for the law are greatly reduced here by the District Court‘s probationary sentence in a way entirely absent from Gall. Gall was different from the other offenders in his conspiracy specifically and from other drug offenders generally. Specifically, Gall withdrew from the ecstasy distribution conspiracy; generally, he rehabilitated himself in a way that made him an outlier. By contrast, Tomko‘s employment history not only failed to differentiate him, but it also served as the very vehicle he utilized to manipulate his taxes and commit his offense.
This contrast also explains how Gall‘s disparity from other drug distribution conspirators appropriately resulted in a disparity in his sentence in that case, whereas the absence of disparity between Tomko and typical tax evaders should not have resulted in a sentencing disparity of the magnitude we face here. The Supreme Court emphasized “the critical relevance of Gall‘s voluntary withdrawal, a circumstance that distinguished his conduct not only from that of all his codefendants, but from the vast majority of defendants convicted of conspiracy in federal court.” Id. at 600. No such distinguishing circumstance is present here to separate Tomko from the vast majority of defendants convicted of tax evasion. Also, “[g]iven the dramatic contrast between Gall‘s behavior before he joined the conspiracy and his conduct after withdrawing, it was not unreasonable for the District Judge to view Gall‘s immaturity at the time of the offense as a mitigating factor, and his later behavior as a sign that he had matured and would not engage in such impetuous and ill-considered conduct in the future.” Id. at 601. Without imposing any categorical rules about age, we believe it is clear from the record in our case that Tomko‘s turn to charitable work can hardly be characterized as a turn toward maturity and away from impetuousness. Thus, the mitigating factors which supported Gall‘s sentence and made it reasonable under the totality of the circumstances are absent in Tomko‘s case.
IV.
In addition to rendering the Guidelines advisory, the Supreme Court‘s decision in Booker undoubtedly gave courts of appeals a new role of ascertaining whether sentences are reasonable. Contrary to the suggestion of the Majority, when we are faced with a substantively unreasonable sentence, our hands are not tied and we
Although in Gall the Supreme Court reiterated that we apply an abuse-of-discretion standard to reviewing the reasonableness of a sentence, in this same decision the Court clarified that appellate courts must consider both procedural and substantive reasonableness. Accordingly, if substantive reasonableness review is to mean anything, courts of appeals must attempt to give content to this component of our review until the Supreme Court provides further guidance. Having reviewed, with due deference, the District Court‘s stated justifications for granting a significant variance from the Guidelines range, we cannot conclude that the sentence imposed in this case was substantively reasonable in light of the “totality of the circumstances” and the ”
NATIONWIDE MUTUAL INSURANCE COMPANY
v.
CPB INTERNATIONAL, INC.; NBTY, Inc.; Rexall Sundown, Inc., CPB International, Inc., Appellant.
No. 07-4772.
United States Court of Appeals, Third Circuit.
Submitted Under Third Circuit LAR 34.1(a) March 3, 2009.
Opinion Filed: April 14, 2009.
Notes
(1) the nature and circumstances of the offense and the history and characteristics of the defendant;
(2) the need for the sentence imposed—
(A) to reflect the seriousness of the offense, to promote respect for the law, and to provide just punishment for the offense;
(B) to afford adequate deterrence to criminal conduct;
(C) to protect the public from further crimes of the defendant; and
(D) to provide the defendant with needed educational or vocational training, medical care, or other correctional treatment in the most effective manner;
(3) the kinds of sentences available;
(4) the kinds of sentence and the sentencing range established for—
(A) the applicable category of offense committed by the applicable category of defendant as set forth in the guidelines ...
(5) any pertinent policy statement ...
(6) the need to avoid unwarranted sentence disparities among defendants with similar records who have been found guilty of similar conduct; and
(7) the need to provide restitution to any victims of the offense.